2022 (12) TMI 1437 - AT - Central Excise

Levy of penalty - Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - Discharge Certificate of SVLDRS-4 - HELD THAT - The Tribunal in the case of P.B. VYAS VERSUS COMMR. OF CENTRAL EXCISE MUMBAI-III 2021 (3) TMI 1305 - CESTAT MUMBAI has held that insistence of payment of penalty by a co-noticee when the main party has settled the issue under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 defeats the spirit of the scheme itself. The penalty imposed on the Accountant Mr. Sasthi Charan Banerjee being a co-noticee is set aside - Appeal disposed off.

Summary

Issues:
- Imposition of penalty on the Accountant of a company
- Settlement of dispute under Sabka Vishwas Scheme by the main party
- Applicability of penalty on the Accountant after settlement by the main party

Analysis:
The judgment by the Appellate Tribunal CESTAT Kolkata dealt with the imposition of a penalty of Rs.25,000 on an Accountant of a company, M/s. Calstar Sponge Limited. The main party, M/s. Calstar Sponge Limited, had settled the dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and received a Discharge Certificate for full and final settlement of Tax Dues. The Tribunal noted that since the main party had settled the dispute under the said Scheme, the penalty imposed on the Accountant did not hold. The Tribunal emphasized that there was no need for the Accountant to file a separate application on the same grounds, as the penalty did not survive due to the settlement by the main party.

Furthermore, the Tribunal referred to a previous case, P.B. Vyas Vs. Commissioner of Central Excise, Mumbai III, where it was held that insisting on the payment of penalty by a co-noticee, such as the Accountant in this case, when the main party had settled the issue under the Sabka Vishwas Scheme, goes against the spirit of the scheme itself. Citing the above decision, the Tribunal set aside the penalty imposed on the Accountant, Mr. Sasthi Charan Banerjee, as he was a co-noticee and the main party had already settled the issue under the Sabka Vishwas Scheme. Consequently, the Tribunal disposed of the appeal in favor of the Accountant, in line with the decision and rationale provided in the referenced case.

In conclusion, the judgment highlighted the importance of considering the settlement of disputes by the main party under schemes like Sabka Vishwas in determining the applicability of penalties on co-noticees. It underscored that once the main party settles the issue, the penalties imposed on co-noticees may not be sustainable, as evident from the legal principles established in previous cases and the spirit of the scheme itself.